The contentious issue of spec work flares up every so often. Following the release of a video by Toronto agency, Zulu Alpha Kilo, showing the way other industries react to working for free, spec work has been placed firmly back on the agenda over in the US, with the agency calling for the industry to “ditch it”.
But spec work isn't just a problem overseas. Creatives closer to home say it's “endemic” in the culture of pitching, but that it's up to agencies to put an end to it.
McCann Sydney managing director, Adam Lee, told AdNews there are very few instances where agencies are paid fairly for pitch work.
“It's endemic throughout the culture,” Lee said. “I'm uncomfortable with the amount of intellectual property that as an industry we give away. It undervalues the business that we’re in.”
Zulu Alpha Kilo's ad (below) shows just how absurd the same principle is in restaurants or personal matters in asking for products or services for free, or in advance.
303Lowe CEO, Nick Cleaver, said the idea of spec work is a “remnant of a bygone age” when margins weren't nearly as squeezed, clients would typically retain agencies for a longer period of time and there were ample opportunities to recoup those loses.
He said the world has changed since then. Clients have demanded greater transparency, margins are tightened and relationships are more short-term or project-driven, but the payment structure hasn't evolved.
“Some clients are mindful and respectful of agency resources and time and not all clients abuse that opportunity,” Cleaver said. “However, some do and it still goes on that there are too many agencies on a pitch, the remnants of a pitch are too expensive and the rewards are too meagre.”
“I think it's beholden on the industry to make recommendations to clients on how to behave.”
Clemenger BBDO Sydney managing director Andrew Holt said that in Australia the issue is more around the way agencies pitch rather than 'spec work' per say but said there is a better way of doing business.
He said if agencies "declined to pitch with the same enthusiasm that as they chose pitch" that might make the process more manageable.
"We - agencies - are guilty of pitching too much," Holt said. "If we didn't, it would probably create a smaller and more manageable process and probably encourage clients into that more realistic and ongoing assessment of 'are these the right people for me?'.
"That's something we can control, every single one of us."
The Hallway managing partner Jules Hall agrees that while the definition of spec work can differ wildly from pitch to pitch, there is a “phenomenal amount of expectation from clients” during the process. He said the rate card value of hours and the hard costs of pitches can amount to well over $100,000 on particularly large pitches.
In addition, with more and more clients looking at project rather than retained work, agencies who sell project work at the same price as they have sold work as a retained agency are in even more trouble.
“Agencies can drive themselves out of business by pitching irresponsibility because you can burn all of your profit margin so quickly by accepting poor quality pitches,” Hall said.
“You have to look at how you recoup the cost of pitching once you have won the business. Quite often, it's not possible to do that.”
AnalogFolk executive creative director and partner, Matt Grogan, said his agency refuses to sign on to a pitch where the client is asking to retain the IP on ideas presented during the process. But, as to whether agencies should all flat-out refuse to do spec work, Grogan doesn't think it's likely.
“We’ve knocked back many pitches for a range of reasons,” he said.
“But I’d take my hat off to any agency that consistently does so based on refusal to do spec work. I’m not sure how long you’d survive in this market. There is always going to be another agency out there willing to dance for a shot at a big brand. If things are to change they have to come from the client or regulated by an industry body.”
Lee said he doesn't think industry regulation is necessarily the right solution. He said agencies are in this predicament because they've allowed it to be the way they conduct business, and for that reason, agencies need to be the ones to change it.
“There will be a tipping point where you have the critical mass of smart people in agencies saying 'no I'm not willing to engage in speculative pitching unless there is a fee involved',” Lee said.
“If you get enough agencies on board, you're only going to get a small number of people that do it for free and nine out of 10 times the quality of those people will also be questionable because they don't value their product enough.”
Hall agreed the change will be “more subtle” than a sweeping movement through an industry model.
“You're going to see smart agencies finding ways to circumvent it and if they've got a strong brand that clients really want to work with then the conversations will happen that allow them to approach that agency differently,” he said.
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